March 3, 2010

Medicare and Physician Pay: Jim Bunning's Bean Ball

There are four things that are memorable about Jim Bunning's professional baseball career: First, tossing a perfect game for the Philadelphia Phillies against Trace Stallard and the New York Mets on the afternoon of 21 June 1964, lowering his ERA to 2.07 in the process (Phillies: 6 runs, 8 hits and no errors; Mets: Zip, Nada and Zilch); second, finishing second in the Cy Young voting in 1967 (Mike McCormick of the Giants won with 18 first place votes; Bunning got one, but, hey, it was good enough for the silver medal); third, from 1955 to 1963 while pitching for the Tigers, striking out Ted Williams more than any other pitcher Williams faced (and, as Jim Bouton's Memoir, Ball Four, tells it, Teddy Ballgame did not like it one bit); and fourth, entering the Hall of Fame compliments of the Veterans Committee in 1996.

About this time in Washington, DC, there are many Republican Senators, baseball fans all, who are wishing that the 6'3", 190 pound righthander had called it quits right there and retired to the backwoods of Kentucky. But, of course, he didn't. He had to go ruining it all by running for and winning a Senate seat from the blue grass state in 1998; and then he did it again in 2004! The political version of the Peter Principle.

Republicans politely call him "cantankerous" - at least that's what they say in public. Behind the scenes, they're not so nice about it. Senator Bunning marches to his own drummer, and always has.

One Pitch, Three Strikes
He's retiring this year, but not before throwing one more hard-breaking slider (his best pitch back in the day). On Monday he managed something he never could in the Big Leagues - he threw three strikes with one pitch. By preventing a vote on an emergency spending bill, Senator Bunning: first, at least temporarily, killed an extension of unemployment and COBRA subsidy benefits for more than a million long-term unemployed Americans; second, shot down a short-term extension of the Highway Trust Fund, which is a federal fund set up to pay for transportation projects nationwide, after which Transportation Secretary Ray LaHood said that up to 2,000 employees at the Transportation Department will be furloughed without pay as a result; and third, insured that Medicare would immediately reduce fees to physicians by 21.3% via the Medicare Sustainable Growth Rate Factor (SGR). Wow, a "threefor!"

Strike 3 is what concerns us here. We've written often about the steep and steadily rising costs of Medicare, and now along comes Senator Bunning saying we have to lower costs and let's do it on the backs of hard-working primary care physicians. He certainly has a point that we need to lower Medicare costs, although he expressed it in a wild pitch sort of way. Here's a chart from the Centers for Medicare and Medicaid Services (CMS) that shows what will happen to Medicare costs in the future if nothing changes. The vertical axis is percentage of GDP:

And here's a summary from a Congressional Budget Office (CBO) Issue Brief on the Medicare Sustainable Growth Rate Mechanism (PDF). It's from September, 2006, but is still appropriate: The Supplemental Medical Insurance program (Part B of Medicare), which will cost about $158 billion in 2006, pays for physicians' services, outpatient hospital services, durable medical equipment, physical therapy, and certain other outpatient services. About 38 percent of those expenditures are payments for services provided by physicians, which are based on a schedule of fees that specifies the amount to be paid for each type of service. Most of Medicare's payment rates are simply adjusted each year for inflation--but not those for physicians' services (emphasis added). Those rates are governed by a complex formula -- the Sustainable Growth Rate (SGR) mechanism.

The SGR is pegged against a target originally established in the 1997 Deficit Reduction Act. Its aim is to hold down Medicare costs. It's calculated every year, and every year since 2004 this complex and nearly Byzantine calculation has called for an annual reduction of physician reimbursement rates by an average of 3% to 4%.

Nonetheless, every year since 2004 Congress, yielding to the medical lobby, has voted to override it by delaying the triggering of it. The trouble is, the law is cumulative. So, what Congress has done in a typically heroic display of moral courage, is to dig itself into an ever-deepening hole by not facing up to yet another looming catastrophe. Sound familiar?

Docs Rush the Mound
The AMA is nearly apoplectic about the SGR and the prospect of Senator Bunning causing it to be finally triggered. Monday, the organization was out in force in DC making its views known. The current President, Dr. James Rohack, went on Bloomberg and, later, CNN with Larry King. President-Elect Dr. Cecil Wilson even did an hour on Washington Journal C-Span answering questions from Democrats, Republicans and Independents, and, generally making his case.

And his case was that for a while now, physicians have been abandoning the Medicare ship, because, even though their Medicare fees have remained steady due to the congressional overrides, they claim they're losing money with Medicare patients because their costs have been inexorably rising. Moreover, it's no secret that there is an ever-increasing shortage of primary care physicians, and CMS reports that, while 92% of primary care physicians participate in Medicare, only 73% are accepting new patients. If nothing changes, that will surely drop precipitously.

So, we're left with another one of those rock and hard place things. Medicare could bankrupt the nation, but physicians don't get paid enough from it.

Yesterday, Congress stole second base on Bunning by extending unemployment and COBRA benefits for another month and by delaying the 21.3% Medicare physician pay cut until the end of March, at which time we'll probably have to go through this whole thing all over again. (Yogi Berra's "déjà vu?)

Perhaps Senator Bunning's out of left field move will actually cause Congress to do something it has thus far been absolutely incapable of doing regarding our nation's health care. That is, fix it.

Right. And tomorrow 78 year old Jim Bunning will quit the Senate and to great expectations accept a $100 million free-agent contract to rejoin the Phillies as their Pitching Ace.